In order to expand its Product Lifecycle Management ("PLM") product offerings, Autodesk Inc. (ADSK) recently announced the acquisition of certain assets of Inforbix LLC. Although terms of the transaction were not disclosed, the deal is expected to have no impact on Autodesk's earnings guidance issued earlier on August 23, 2012. Boston-based Inforbix develops software solutions that allow users to scan and access on-premise product data from multiple sources without any extraction, import or conversion. The software also helps in connecting disparate data elements. Since it is cloud-based, Inforbix software is easy to deploy and much more cost-effective than traditional applications.
Autodesk plans to integrate Inforbix software into Autodesk PLM 360 (its first cloud-based PLM suite launched early 2012), which will expand the suite's indexing, searching, personalizing, and data visualization capabilities.
Autodesk has been expanding its cloud-based product offerings primarily through the acquisition of small start-ups and Software-as-a-Service ("SaaS") providers such as Inforbix.
We believe that Autodesk will continue to pursue strategic acquisitions in order to expand its digital prototyping solutions. These solutions are expected to cater to manufacturers of all sizes, enhancing their ability to design, visualize and simulate their products before they are built.
Moreover, accretive acquisitions will enable Autodesk to take advantage of the staggering growth potential in cloud computing. According to Forrester, the global market for cloud computing will grow from $40.7 billion in 2011 to more than $241.0 billion by 2020. As per data available from Deloitte, cloud-based applications will replace 2.34% of enterprise IT spending in 2014, finally rising to 14.49% by 2020.
We believe that the new cloud-based products will boost Autodesk's subscriber base in the near term. The company is also increasing its penetration in the mobile market by developing software for smartphones and Apple's (AAPL) iPad. We believe that these initiatives will boost Autodesk's top-line growth going forward.
However, foreign exchange fluctuations and sluggish macroeconomic environment remain the primary headwinds. Autodesk's high exposure to Europe amidst the lingering financial turmoil in the region keeps us cautious. Moreover, customer concentration and increasing competition are the other headwinds.
We have a Neutral recommendation on Autodesk's shares in the long term. Currently, Autodesk has a Zacks #4 Rank, which translates into a short-term (1-3 months) Sell rating.